Even when a well-crafted trust document is in place, legal issues can still arise. Often, the help of an experienced trust litigation attorney is necessary.
For example, a trustee could be accused of breaching their fiduciary duties, undue influence or lack of capacity to execute a document. Such allegations can lead to litigation that can span decades.
What is Trust Litigation?
Trusts are popular in estate planning for a variety of reasons, including avoiding the probate process. However, a trust is still a legal entity that can be subject to disputes and other issues. When a trustee is accused of wrongdoing or breaching their fiduciary duty, the beneficiaries of the trust may file a lawsuit to hold them accountable and ensure that the estate and assets are administered in accordance with the law.
As with any type of litigation, the process can be complicated and expensive. Therefore, the parties involved must carefully consider all of their options and choose the best course of action to pursue. In many cases, a dispute can be resolved through informal dispute resolution methods such as mediation or arbitration. However, when significant amounts of money or property are at stake, litigation is often necessary to protect a party’s rights and interests.
A trust litigation lawyer is an essential asset for any beneficiary who suspects that the trustee has violated their legal duties or acted improperly in the management of the estate and assets of the trust. For example, if the trustee engages in self-dealing or takes inappropriate advantage of the trust creator to make a private profit, the trustee can be sued for breach of fiduciary duty and other related claims. In addition, a trustee who fails to keep proper records or acts with undue haste can be found guilty of mismanagement and be forced to reimburse the beneficiaries for any losses.
Disputes can also arise between different family members or friends that are not parties to the trust. This type of litigation can cause tension and strain relationships. In addition, it can drain valuable resources that have been set aside for loved ones and could potentially jeopardize their financial stability.
When Is Trust Litigation Needed?
When a dispute over a trust occurs, either between trustees or between beneficiaries, it can often involve serious allegations of wrongdoing. A knowledgeable trust litigation attorney can help all parties involved in a dispute understand the legal process and make informed decisions about how to move forward.
A few key factors can lead to trust litigation, including disputes over the distribution of assets, claims of breach of fiduciary duty by a trustee, and challenges to the validity of a trust. Disputes over the distribution of trust assets usually stem from disagreements about the interpretation of trust terms and allegations that a trustee is mishandling or misappropriation of assets. A dispute may also arise over the amount of fees charged by a trustee for services. Most trusts have set fee schedules for these services, and the wise Trustee makes sure that Beneficiaries are aware of these fees and, if necessary, gets court approval before pulling any fees out of the Trust.
Trustees may be sued for breach of fiduciary duties when they engage in self-dealing or conflict of interest. These are breaches of a trustee’s obligation to the beneficiaries of the trust and the grantor’s wishes. Similarly, trustees are required to provide regular accountings and information to beneficiaries. Failure to do so can be a basis for trust litigation.
Challenges to the validity of a trust are often based on claims of undue influence, fraud or duress, lack of capacity, or ambiguity in a trust document. These claims can lead to costly and complicated legal proceedings that require the assistance of a skilled and experienced attorney.
The best time to consult an attorney about a possible trust dispute is before it becomes a legal issue. An attorney can help you anticipate potential conflicts, take proactive steps to prevent them, and effectively address issues when they do arise. This can avoid costly litigation and allow you to move forward with the full benefits of a trust. Moreover, an experienced attorney can help you reach a favorable resolution more quickly and cost-effectively than traditional litigation. Alternative dispute resolution methods such as mediation can also be valuable tools for resolving a dispute.
How Do I Know If Trust Litigation Is Needed?
There is a lot of value in having a well-drafted trust document. However, as with all legal arrangements, issues can arise that require the assistance of a trust litigation attorney. These disputes are more common than you might think, especially in cases involving family members, and even when the trust is established under the best of circumstances.
Disputes between beneficiaries can often come up when heirs are unhappy with the distribution of assets, disagree about the management of a specific asset or property, or believe that there was undue influence upon the grantor during the creation of the trust. A lawsuit against a trustee can be initiated when a beneficiary can prove that there was improper or illegal management of the trust. Beneficiaries are also entitled to receive information about the management of the trust, which they can request through a formal written demand. This information could include a detailed account of transactions, financial history, or a list of the trust’s assets.
The most serious type of dispute that requires a lawyer is when there is a breach or violation of fiduciary duties by the trustee. Beneficiaries may bring a claim against the trustee for actions such as stealing, diverting or misusing trust funds or assets for their own benefit or to pay for personal expenses. A breach of fiduciary duty by a trustee can be very damaging to the beneficiaries and can lead to a great deal of expense for all parties involved.
A court can modify the terms of a trust to achieve tax objectives or to comply with a law that was not considered at the time of the trust’s establishment. A beneficiary can also initiate a lawsuit to force the removal of a trustee who has committed certain misconduct or is incompetent. However, a successful action against a trustee can be very costly to the beneficiary and will usually include a substantial award of damages for the loss caused by the trustee’s negligence or wrongdoing. In some instances, the statute of limitations will toll, allowing beneficiaries to pursue claims against trustees for acts that occurred decades prior to the filing of the lawsuit.
How Does Trust Litigation Work?
Trusts are one of the best ways to protect your assets from a claim against your estate by other parties. But, despite the many benefits of creating a trust, there are times when things do not go as planned, leading to disputes between trustees and beneficiaries. In these situations, litigation is often needed. Litigation can be a costly and time-consuming process, so it is important to discuss your case with a trust litigation lawyer before proceeding.
Most of the time, when a beneficiary believes that a trustee has not been performing their duties properly, they file a legal complaint against them in probate court. The initial pleading filed is called a Petition, and it states the facts and law that justify a remedy of some kind (like money damages). The petition might ask the court to compel the trustee to change their behavior, to pay them restitution for lost assets or fees, to remove the trustee, or for other reasons.
Trustees have a legal obligation to adhere to fiduciary duties such as loyalty and full disclosure, which means that they cannot take advantage of their position by self-dealing or failing to follow the terms of the trust agreement. Unlike personal actions brought against private citizens, trust litigation has a statute of limitations that tolles for decades so that minor beneficiaries can bring action against trustees for wrongful acts committed years ago.
Beneficiaries may also feel that they have not received the inheritance they were promised by the trustee and might sue them for breach of fiduciary duty. This type of lawsuit can become very complicated, especially when a trustee is accused of misappropriating funds or frivolous claims against the trust. A skilled trust litigation attorney can help the trustee defend themselves from such allegations and provide the evidence required by the law to prove their side of the story.
The right trust litigation attorney will have extensive experience assisting clients in their fight against greedy and dishonest trustees. They will be able to guide you through the complex world of trust litigation and ensure that the interests of the beneficiaries are protected, regardless of who is at fault.